Wholesale Markets for Craft Items

You can find wholesale buyers for wood craft items, but the margins are very tight. January 7, 2007

I am a one man shop in a small community. I primarily make my living doing finish carpentry and light remodeling. For the past two years, I have also been making and selling wooden craft items at arts and craft shows as a supplemental income. It has been a help in that remodeling work in this area tends to slow in the holiday season, but the crafts increase.

My question is that I am thinking about selling my crafts wholesale to gift shops, etc. and I am looking for responses from woodworkers who are doing this or have tried it. I am hoping to get some pointers so that I can avoid the any pitfalls. Any help would be greatly appreciated.

Forum Responses
(Business and Management Forum)
From contributor D:
I would recommend teaming up with an internet marketing specialist many of which can be found selling like products on e-bay and such. These people are hungry for suppliers. Suppliers are in much greater demand than marketers.

From contributor J:
All of the type of woodworking you mentioned that I've done has been for friends or family. It doesn't appear to me that there would be any money in it. Have you considered building the cabinets for your remodeling jobs? I have to say I admire your patience as a remodeler. The thought of remodeling a house myself gives me a migraine; I'd rather eat broken glass. On the other hand, I sure do build a lot of cabinets for remodelers. Blending those two businesses together would be the ultimate test of your management skills, but others have done it successfully.

From contributor A:
I would be very careful that whatever you did in this market would have enough profit to make it worth your while. Go to some craft fairs and see what things sell for. To wholesale you need to produce for about half of what they are selling for. If you can do that, go for it. I give my cutoffs to a craft woodworker and he has cut down to about two shows a year. He was not making any money at the rest.

From contributor X:
Finding a trade show that handles your type of products is what I would gear up for. Locating traveling salesmen who need a filler in the products they sell will save you time and money. If you have the right product and quality it will sell. Problems arise when you’re selling whoever is building the product. Getting the right people to support the project can be the cause of your demise.

From contributor S:
Our company makes wooden crafts and sells them at retail on the internet. We make about 500K per year (gross) and do quite well at this. We also wholesale to about five customers, but this is a difficult subject and calls for a really careful analysis of expenses including time. I'm not sure that I think this is possible at all for a single person operation unless it involves a very unique product. Inevitably, a small margin, high-volume business cries out for employees as you get tired of, for example, sanding pieces.

In general, smaller retail stores tend to keystone prices (double them). Out of the 50% that they pocket they pay their expenses, salaries, and profit. The corollary is that the wholesaler has to make something for $5.00 that will readily sell for $10.00. And the $5.00 has to include the costs of marketing to the retailer as well as all of the ordinary costs of production.

Meantime, the wholesaler is often constrained from selling at retail at the same time - unless the wholesale customer is far away. To do so is to compete with one's own customer. So wholesalers generally have to stay out of the retail market when it would compete.

The idea here is that the wholesaler makes money because the increased volume allows for cost efficiencies, but often there are few savings at an intermediate level. For example, you can really save quite a lot if you can afford to buy and use a trailer load of lumber - but that's a lot wood.
Similarly, certain machinery will markedly increase production efficiency and reduce labor costs, but that machine has to be kept running 24/7 to provide these efficiencies and still pay the mortgage.

You might do well to arrange for counseling at your local branch of SCORE. They can usually be reached by calling the SBA or your local Chamber of Commerce. Retried executives of SCORE provide this service free of charge, and you will often find persons who have navigated these waters.

But as I said first off - we do it. We do it by selling at retail a very high quality product at the highest possible price, and by selling at wholesale for a very tiny margin. In time, we hope that this will result in growing wholesale volume, but I can tell you that it is slow going and the slightest mistake quickly erases all our wholesale profits.